Chapter 9

Credit Problems and Laws

Slide 2

When Is Bankruptcy a Good Choice?• Bankruptcy is a legal procedure to

relieve a person of excessive debt.

• It can be voluntary or involuntary.

• It gives debtors a fresh start.

• It helps ensure fair treatment for creditors.

• It should be a last resort because it damages your credit rating.

9-2 Bankruptcy Choices

Slide 3

Avoiding Bankruptcy

9-2 Bankruptcy Choices

• Credit counselingo Sets up a budget and arranges a

payment plan

• Debt managemento Creates a plan to pay off debto Debtor must turn over checking

account and give up credit cards

• Debt consolidationo Process of getting one loan to

pay off all debts

Slide 4

What Are the Types of Bankruptcy?

9-2 Bankruptcy Choices

• Chapter 7 o Also called straight or

liquidation bankruptcyo Involves the forfeiture

of assets in exchange for discharge of debts

oAllows for exemptions, or property that a debtor does not have to forfeit, such as tools of trade

Slide 5

What Are the Types of Bankruptcy?

9-2 Bankruptcy Choices

• Chapter 11 o Also called a reorganizationo It is the reorganization of debt as decided

by the court.o Allows a business to remain viable

• Chapter 13 o Also called individual debt adjustmento Involves a 3- to 5-year repayment plan for

some of the debt

Slide 6

Building Communications Skills

9-2 Bankruptcy Choices

Persuasive Speaking• Open with attention-getting remarks.• Clearly state the position or action you want

listeners to support.• Give supporting data or quotes to strengthen

your position.• Prepare for negative reactions or questions.• Listen to campaign speeches and apply

techniques to your speech.